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PS’ survey: How companies have reacted to the changes in the fringe benefits – Cafeteria package

On July 20, 2018, the Hungarian National Assembly adopted the 2019 tax package that fundamentally changed the rules for fringe benefits. The research of Process Solutions, as a financial and accounting service provider, aimed to look into how employers reacted to the changes that came into effect in January.

Survey on changes in fringe benefits in Hungary




Process Solutions’ research, fringe benefits, Cafeteria package, 2019 tax package, adaptation by employers

Process Solutions, with the involvement of nearly 50 companies, researched the effects of the changes in the Cafeteria system. According to the results, small companies were not affected by the change, many of them decided to simplify the cafeteria package, and companies with more than 100 employees typically did not or only partially took over the extra tax burden.


“According to the research, 89% of the participating companies did not completely abolish the Cafeteria benefit system, because building these benefits into wages would have also added to the base for the payment of all other basic salary benefits (e.g. overtime). So it seemed a safer and simpler solution to offer the option of cash payment for the employee, despite the high tax burden,”  said Judit Varga, manager of Process Solutions.


Instead of removal, 33% of the surveyed companies have retained and greatly simplified the Cafeteria package, but did not take over the extra tax burden, so employees could still have the same gross pay but could choose from fewer items. Most of the companies maintained the SZÉP Card, which is subject to reduced taxation and tax-free items (children’s daycare). In addition, it is also a typical solution that employees can choose the option of cash benefit, with a significant (81.95%) tax burden, taxed as income. This solution is particularly common for companies with a larger number of employees.


Quite a number of companies have chosen to keep all or almost all of the elements in their Cafeteria system, regardless of the fact that “it is not worth it” for the employee to choose a non-cash item taxed as income. Based on the research, the companies did not keep the housing loan support even though they had only slightly changed the list of the previous optional items.


Companies with a small number of employees were less affected by the changes, as they did not provide such benefits to their employees in previous years either. More than 40% of the respondents took over all parts of the tax burden, and the overall tax burden was a typical solution by companies with a smaller number of employees.